New Arkia Owners Face Labor Dispute and Deep Financial Woes
Translated & summarized from Globes by baba
The Nakash family is selling its controlling stake in Arkia airline for an estimated NIS 40-50 million to a group led by Kidyan Dahari and Yaron Adib. The new owners face an immediate labor dispute declared by the Transport Workers Union and deep financial losses, projected at $50-60 million for the year. An aviation expert believes the investors will stabilize the company short-term but warns of long-term challenges in achieving profitability and improving service quality, noting the buyers' lack of industry experience.
The story in 5 lines · by baba
- Arkia airline is being sold by the Nakash family to a group including Kidyan Dahari and Yaron Adib.
- The Transport Workers Union declared a labor dispute over unilateral actions and potential layoffs.
- Arkia is expected to lose $50-60 million in 2023, requiring significant investor capital.
- The new owners lack aviation experience and will need to hire industry experts.
- Arkia has the worst flight delay record among Israeli airlines.
The Nakash family is selling its controlling stake in the airline Arkia after 20 years, reportedly for NIS 40-50 million. The new owners, a group including Kidyan Dahari and Yaron Adib, who own the Yeshpro-Tenoport group, will face significant challenges.
On the day of the sale announcement, the Transport Workers Union in the Histadrut declared a labor dispute, citing unilateral actions by Arkia's current owners, including workforce reductions and efficiency measures. Negotiations are underway between the Histadrut, the workers' corporation, and the potential buyers, with the union stating no deal will be finalized without worker agreement.
Beyond the labor issues, the airline is in deep financial trouble. Arkia is estimated to have lost approximately $30 million in the first three quarters of the year and is expected to finish 2023 with a loss of $50-60 million.
Dr. Uzi Freund-Feinstein, an aviation expert, believes the new investors will inject capital to stabilize the company, allowing operations to continue in the short term. However, he notes that the winter months typically see reduced revenues, and turning a profit will take time. Freund-Feinstein is skeptical about the medium-term outlook, emphasizing the difficulty of making money in the aviation industry and the need for the new owners, who lack aviation experience, to bring in industry experts, similar to the model at Israir where Ori Sirkis manages the company and Rami Levy handles finances.
Arkia also suffers from poor service, being the Israeli airline with the most flight delays, averaging 58 minutes for departures and 46 minutes for arrivals. The new owners will need to address service quality alongside financial stabilization. Freund-Feinstein concludes that this could be a new chapter for Arkia, beneficial for passengers, but expresses uncertainty about the future of the employees given the company's difficulties.
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